Standard & Poor's settles for $1.4bn over ratings allegations

 
Billy Ehrenberg
Follow Billy
The company will also pay $125m to Californian public pension fund Calpers, to settle a different claim (Source: Getty)

Standard & Poor’s (S&P) has reached a settlement with US authorities to pay $1.4bn (£900m) over claims it handed out inflated ratings to debt tranches based on US mortgages.

Prosecutors alleged S&P did so despite knowing risks were building in the market.

McGraw Hill, which owns S&P, has agreed to pay $687.5m to the US Department of Justice, and the same amount again split between 19 states and the District of Columbia.

The allegations are that between 2004 and 2007, S&P handed out AAA ratings to mortgage-backed bonds and collateralised debt obligations that were far from stable, contributing to the shockwaves from the financial crisis.

S&P strongly denied the accusations when the case was first brought, calling them “meritless.” The ratings, it said, were based on good-faith assessments during a period of intense financial upheaval.

The company will also pay $125m to Californian public pension fund Calpers, to settle a different claim.

Related articles